Canada's Housing Crisis: Eight Solutions

Canada’s housing crisis is far more severe than most people realize, and there are eight solutions that could end it, once and for all.

Guy Dauncey

March 30, 2017

Photo: Caelie Frampton via flickr (image has been modified)

The housing crisis is happening in many cities around the world, not just the big ones like Vancouver, London, and New York. It is far more serious than most people realize, and calls for far-reaching, innovative solutions.

Thirty years ago, if you had a reasonable income, the gap between renting and owning was bridgeable. Today, in many parts of Canada, it is not. In 1976, it took five years to save for a 20% deposit on a mortgage. Today, it takes sixteen years in British Columbia, twenty-three in Vancouver. The average household income in Vancouver has grown by only 11% since 2001, while the cost of housing has risen by 172%.

And here’s the thing – a third of Canadians don’t own property, so their children will never inherit. Unless they win the lottery or start some genius business, they will have to rent for life, constantly on edge, part of the permanent minority of renters, feeding money to property owners for as long as they live, causing the divide between rich and poor to grow ever wider.

A Miserable Cascade of Suffering

High rents and housing prices are driving young families out of the city, causing painful disruptions to family life. They are increasing pressures on the vulnerable, who resort to couch surfing or living in their parents’ basements. And they are hell for the super-vulnerable, 35,000 of whom live in the bushes, on the streets or in emergency shelters on any given night in Canada. It’s a miserable cascade of suffering.

Canada is one of the most comfortable and wealthy nations in the world. Are our politicians really unwilling to make the commitment that every Canadian should be able to live in a safe, affordable home, and homelessness will end forever? These are achievable goals, if we only cared enough.

So What’s To Be Done?

The first step is the simple commitment to get it done. The federal government has opened the dialogue with its “Let’s Talk Housing” initiative, and will be publishing its National Housing Strategy in 2017. The commitment – a highly appropriate 150th Birthday gift to Canada – should be a declaration that housing will henceforth be an inalienable Charter right, not something to be left to the market, and that by 2020 every Canadian will have access to a safe affordable home.

In Metro Vancouver, the Canadian Centre for Policy Alternatives estimates the need at 5,000 to 10,000 new units of affordable housing a year. For BC we need 10,000-20,000 units a year. Federally, First Nations have a shortage of 40,000 to 85,000 homes. At $250,000 each, that’s $2.5 to $5 billion a year, but as I’ll explain below, it could cost a lot less.

So far, the federal and provincial governments have committed to build 2,900 rental units in BC. It’s a beginning, but nowhere near enough. Vancouver and Victoria have been working hard and doing their best, but they need far greater strategic support.

A third of Canadians don’t own property. Unless they win the lottery or start some genius business, they will have to rent for life, constantly on edge, feeding money to property owners for as long as they live, causing the divide between rich and poor to grow ever wider.

Solutions

#1: Restrict Foreign Ownership and End Tax Evasion

Our governments should restrict the foreign ownership of land, or limit it to residents of any nationality who live and pay taxes in Canada.

We must also work far more actively to close the tax havens, which cost Canada $6 billion per year in revenue. We should require any company buying property in Canada to join a public register of beneficial ownership showing who the owners are. We should punish financial professionals who help Canadians evade taxes. We should close the loopholes and dodgy practices that enable tax-evaders to buy and flip property. We should enable local municipalities to impose a hefty annual surcharge on properties owned by offshore entities.

#2: Use Municipal Powers

Municipalities can use inclusionary zoning to require developers to make 30%, 50%, or 100% of new units of a development affordable and family-friendly, generating mixed-income communities.

They can zone for increased densification in single-family neighbourhoods to allow more townhouses. They can allow car-free laneway housing and secondary suites, accompanied by good transit, safe bike-routes, and car-sharing.

They can encourage designs such as the Montreal Grow Homes, which start small and can be added to as a family grows. They can encourage self-building, as practiced in Holland, where new homes, often in large developments, are financed and customized by individuals earning less than $29,000 a year with help from government stimulus schemes, now accounting for a third of all homes bought in Holland. They can make it easy for non-family members to buy a house together, owning it as “tenants in common.”

They can allow land left idle for more than a year to be used for temporary tiny- home villages, learning from Dignity Village in Portland.

They can limit AirBNBs to principal residences, denying licenses for separate apartments or houses. In Vancouver, this could release as many as 3,000 units back into the long-term rental pool.

They can adopt the Whistler model, established in 1997 to address the chronic shortage of staff housing. 1,000 properties are now available only to local employees and retirees, and the sale-price increase is controlled by the national price index, not the property market. Vancouver’s Affordable Home Ownership Pilot Program works on similar principles.

#3: Build a Big Pool of Money

Seattle has had an affordable housing levy since 1981, enabling the city to build 12,500 affordable apartments, help 800 families to purchase their first home, and provide emergency rent assistance to 6,500 families.

We could impose an additional levy on properties bought through offshore companies, and by non-residents or non-Canadian taxpayers, as the UBC economist Joshua Gottleib has proposed.

Vancouver is already charging a 1% property value tax on empty properties, targeting 10,000 empty condos. If 20% were used for rentals, this would increase the vacancy rate from 0.6% to 3%.

There could be an escalating property transfer tax on high-end properties, which would also help cool the market, and end to the loopholes that enable people to avoid paying the tax altogether. The BC government has raised the tax to 3% for the portion above $2 million, but it could go higher.

There could be a 10% speculation tax on properties bought and flipped quickly.

And finally, no doubt controversially to some, we need a progressive tax on inheritances over a certain level, with all the revenue being invested in affordable housing.

#4: Housing First

Every municipality should adopt the “Housing First” approach to homelessness, giving priority to ensuring that everyone has a home to live in before focusing on mental illness or drug and alcohol addiction. Since starting on its strategy in 2009, Medicine Hat, Alberta, a city of 60,000, has eliminated 100% of its homelessness, providing secure homes for 875 people, including 280 children.

The Canadian Alliance to End Homelessness’s “20,000 Homes” campaign is leading the call for Housing First, asking for 20,000 new homes to be created for the homeless by July 2018.

#5: Build Affordable Housing

With money in the pot, we need to tackle the crisis with the same determination and ambition that Tommy Douglas adopted for Saskatchewan’s heathcare crisis in 1962. We need up to 20,000 units of affordable housing a year in BC alone, generating 22,000 new jobs for builders and the trades.

If the homes were designed using pocket neighbourhood principles, prioritizing humans over cars, and Passive House principles, eliminating the need for heat, they would also be solutions to the loneliness crisis and the climate crisis.

If land being purchased were placed in a Community Land Trust, it would be off the market forever, while the homes could still be bought and sold. This is the best way to guarantee permanent affordability, while allowing families to own their homes and leave them to their children in their wills. This is how Vancouver is proceeding, with the Vancouver Community Land Trust Foundation.

There is also an urgent need for 20,000 new units of student housing in BC. The universities have said they are willing to self-finance their own projects, but they need a provincial arrangement whereby the debt will not fall within the government’s total capital debt. At $100,000 per unit, this will be the most cost-effective way to relieve the rental pressures in Victoria, Vancouver and Burnaby.

One thing is certain: without deep, intentional solutions, this crisis will only get worse.

#6: Housing Cooperatives

In Montreal, the non-profit Batir Son Quartier has developed 10,900 units of affordable housing since 1976, half in cooperatives. In Sweden, 13,000 housing cooperatives provide housing for 22% of Sweden’s population. The tenant-owners finance 75-80% of the development costs, and the rest is financed by a loan taken out by the cooperative.

Zurich has no housing crisis because the city responded to a crisis years ago by offering interest-free loans to buy land for cooperative housing. Today, a quarter of the city’s housing is not-for-profit, 80% in private housing co-operatives.

Zero-interest loans? The BC government can raise finance at 1%. If affordable housing funds are used to cover the 1%, zero-interest loans could be provided to cooperatives and other initiatives.

#7: New Villages

Many younger people want more than an affordable home. They also want to live sustainably with a strong sense of community. They want to build a sharing economy, with a lighter footprint on the Earth. They want to build their own ecovillages and tiny home villages.

The only difference between an ecovillage and a conventional development is that an ecovillage places more emphasis on sociable, pedestrian designs; on habitat and species protection; on solar energy and passive homes. What’s not to like? We should use a small portion of the funds to train people how to become their own developers, forming Ecovillage Development Cooperatives, raising the finance, and navigating the complex world of zoning and development approval.

#8: A Canadian Affordable Housing Alliance

Finally, we need a Canadian Affordable Housing Alliance, with a strongly participative membership among the people who are hit hardest by the crisis: the Millennials, the renters, the couch-surfers, the parental basement dwellers, the homeless. The solutions exist, but political pressure is weak.

One thing is certain: without deep, intentional solutions, this crisis will only get worse. More millennials will be shut out of home ownership, more people will be stressed by unaffordability in the rental market, more people will be obliged to couch-surf or to live with their parents, more people will live in vans and trucks, more people will become homeless, and more angry tent cities will spring up – and not all will be as well organized as Victoria’s.